It has become a "truth" on the right that the IRS "targets" conservative "political" groups. Here is what is going on.
Sea Of Smear Ads From Anonymous Donors
Who is providing the sea of anonymous money behind the nasty smear-campaign ads in local, state and national elections? You might (not) be surprised to find out that these ads are from "social welfare" organizations! These organizations don't have to disclose their donors because they are tax-exempt nonprofits that, according to the Internal Revenue Service (IRS), "must be operated exclusively to promote social welfare."
That's right, your community, state and nation elections are being flooded with nasty, political, smear-campaign ads from organizations that claim to "further the common good and general welfare of the people of the community" and have no involvement with political campaigns.
Social Welfare Organizations
Here are the technical details. A 501(c)(4) charity is a group that does not have to disclose its donors to the public. The law says these groups must operate "exclusively" as "social welfare" organizations and not political organizations. They "must operate primarily to further the common good and general welfare of the people of the community." (Disclosure: The Campaign for America's Future operates as a 501(c)(4) organization; its sister organization, the Institute for America's Future, is a 501(c)(3) organization.)
But government agencies have to "interpret" laws when it comes to their own day-to-day operating rules, and there are grey areas between activities that could be seen as "social welfare" and activities that could be seen as electoral politics. Is voter-registration a general social welfare activity or a political activity? Is issuing a well-researched policy paper on the effect of a higher minimum wage on poverty a social welfare activity or a political lobbying activity?
So years ago the IRS decided that these social welfare groups could spend "up to 49%" of their efforts in politically related activity.
"Congressman Bob Bobson Eats Babies" Is Not A Political Ad?
Obviously these groups are not supposed to be running campaign ads. But a smear ad appearing a week before an election that says "your member of Congress Bob Bobson eats babies" but not "vote against Bob Bobson for eating babies" has been "interpreted" to be a social welfare activity and not a political ad.
Because of this huge, vast, gaping loophole a number of (mostly Republican) political election campaign-related organizations that wanted to hide their donors figured out they could become "social welfare" organizations to run these campaign ads. Then "the Republican majority" on the Supreme Court as E.J. Dionne calls them, allowed billionaires and corporations (even foreign-owned corporations) to put unlimited sums of money into politics. This opened the floodgates of influence-buying – the more money you put into politics, the more tax breaks, contracts, subsidies, monopoly protection, etc. you get back – and a race was on.
Keeping Campaign Donors Secret
Corporations and billionaires that wanted to keep their influence-buying secret could put money into these "social welfare" organizations (and the people running these organizations could make themselves a fortune), so there was a flood of applications to the IRS to start conservative, tax-exempt, "social welfare" nonprofit organizations.
At the same time, Senate Republicans also filibustered the DISCLOSE Act that would let the public know who was funding all of these smear ads.
The Phony IRS "Scandal"
Republicans charge that the IRS is "targeting" conservative "political" groups when they look to see if "social welfare" groups are actually illegally engaging in election-related politics. It has become a "truth" on the right that "the government" is "harassing" conservatives for their politics. They say the IRS is "intimidating" them by looking into "their political activities."
This all feeds into the Republican/Fox News/Wall Street Journal/talk radio/blog "scandal machine." For example, the Wall Street Journal today has this "story" today, "GOP Report on IRS: Only Tea Party Groups Received ‘Systematic Scrutiny’." The party issues a "report" and the conservative media machine blasts the "findings" around the wingnutosphere, and the "outrage" ensues.
Republicans in the House of Representatives have been holding hearings intended to drive this idea of IRS "harassment" out to their followers. Rep. Darrell Issa (R-Calif.) has his Oversight and Government Reform Committee holding televised (FOX) "hearings" that haul people before them to be yelled at by various Republicans. One person, threatened by Republicans with prosecution and jail, was advised by her attorney to assert her Fifth Amendment rights, so Republicans made her appear for hours, repeating again and again that she was "pleading the Fifth." Now Republicans plan to vote to hold her in "contempt" for asserting her constitutional rights, and have even created a logo advertising the contempt vote:
Here's The Thing
The IRS is required by law to look at all applicants to see if they are engaged in impermissible political activity. If they are engaged primarily in political activity, they are neither "charities" nor "social welfare" organizations and, by law, are not supposed to receive special tax status allowing them to keep their donors secret. That alone should tell you that something is fishy with the corporate/conservative accusation that the IRS is "targeting" conservative "political" groups. The IRS is required by law to see if groups are "political."
This is really about Republicans trying to stop the IRS from policing the big right-wing political groups that are using special tax status to mask their donors. This is an intimidation tactic; it's an attempt to keep the IRS from seeing if these groups are engaged in political campaign activity and shut down the ones that are, all in an effort to mask their billionaire/corporate and foreign corporate donors.